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Moody's Warns: Climate Risks Could Cost Global Economy $41.4 Trillion by 2050

Climate change is set to cause trillions in economic losses. Moody's and the BIS urge policy action to mitigate these risks.

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This picture shows a few buildings and trees and we see few vehicles moving on the road and we see...
This picture shows a few buildings and trees and we see few vehicles moving on the road and we see sign boards and traffic signal lights to the poles and a blue cloudy sky and we see few caution signs painted on the roads.

Moody's Warns: Climate Risks Could Cost Global Economy $41.4 Trillion by 2050

Moody's RMSTM Event Response estimates that the Los Angeles wildfires in 2024 alone caused $20-30 billion in insured damages. Global economic losses from natural catastrophes and physical risks are projected to reach $41.4 trillion by 2050, with the US corporate sector facing a 74% increase in average corporate default probabilities.

Moody's projects that without additional policy interventions, global GDP could decrease by 14.5% by 2050 due to these risks. A Category 5 hurricane striking Miami could have long-term economic consequences surpassing a typical recession. In 2024, global natural catastrophes resulted in $320 billion in economic losses, with $140 billion insured.

The Bank for International Settlements (BIS) extends its climate risk forecasts up to 2100. It warns that physical risk could shrink US GDP by 9.5% ($6 trillion) and increase average annual economic cost from natural disasters by 26% by 2050. Corporate operating margins are projected to decline by 2 percentage points due to physical risk by 2050. Commercial real estate loan portfolios face an 18% rise in default probability and over $200 million in additional expected losses due to physical risk by 2050.

Moody's and the BIS highlight the severe economic impacts of natural catastrophes and physical risks. They urge policy interventions to mitigate these risks and prevent significant economic losses. The global economy and financial markets could be significantly influenced by climate risks and natural disasters by 2050.

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